The petition itself, without going into much detail, declares the creation of a $1T coin which is deposited in the US Treasury. This will presumably be used to circumvent the debt ceiling, but not necessarily used to reduce outstanding debt, which was the OP's assumption. To circumvent the debt ceiling, and thus avoid borrowing from the Fed, or say, China, Treasury would either have to a) actually spend the coin itself on a debt that is at least $1T, or b) use it as a license to create a trillion dollar fund to pay its bills - essentially reclaiming its presumed power to create credit-based money from the Fed. Think of this as "making change" for the coin, and breaking it up into smaller denominations.
If the Treasury agrees to accept the coin back and "make change" for it then there would be inflation under either scenario, as new money spent by the government would ultimately wind up as bids for either financial assets, or scarce goods and services in the economy. This, for anyone familiar with my prior posts, would be nothing more than a regressive tax hike - a tax increase on the poor. On the flip side, it would represent the issuance of debt free money, as opposed to delegating that right to the Fed, letting it create trillions, and then loaning that to private banks so they can re-loan it back to the public at interest - usury in its purest form. I have always maintained that if society decides that the public money is to be counterfeited, at the very least it should be highly politicized, since the alternative (which is the premise behind the Fed) is counterfeiting of the public money for private gain!
However, if instead the government under scenario a) uses the coin to instantly pay down part of the national debt, and the coin were NOT accepted back, it would represent a debt default - repudiation, since a 1oz platinum coin marked "one trillion" is certainly not very liquid in that case. This would actually be deflationary, as instead of getting paid in debased money, they wouldnt really be getting paid at all, except for one illiquid coin that might as well be engraved with "**** you, the treasury".
Since, as I maintain that a large portion of the national debt is illegitimate, this would be ideal for the American people in the sense that cancelling a bad debt outwright is more appealing than merely debasing it.
